Traders’ strike paralyses city

Businesses in Kampala’s most thriving hub, Kikuubo, were paralysed on April 8 after traders locked shops, protesting the taxman’s enforcement of the electronic receipting to determine applicable taxes.

Wholesale outlets in Kikuubo, Nabugabo, William Street and Ben Kiwanuka – all in the Central Business District or CBD - remained closed amid tight security deployment. 

The strike which began on April 8 is organised by the Federation of Uganda Traders’ Associations (FUTA) against Uganda Revenue Authority’s move to implement the Electronic Fiscal Receipting and Invoicing Solution, otherwise called EFRIS. 
 
Retailers in other parts of the capital, however, remained open for business.  

Our spot checks showed the strike caught many shoppers, among them those who had travelled from the Democratic Republic of Congo, Rwanda and South Sudan, unawares. 

Many unsure about how long the protest will last were undecided on whether to book accommodation and stay longer, which would impose on them additional food and other upkeep expenses, or cancel orders and return home empty-handed. 

The business hub that normally teems with sellers and buyers, porters and transporters and tax collectors and window shoppers was forlorn.  

Only gun-slinging security forces massed around in a show of might and readiness to tackle any disturbances. 

Subdue, they did. By press time, law enforcement had nipped in the bud a plot to turn the strike into riot and took into custody a couple of suspects on incitement to violence charges after they allegedly lit car tyres in Nabugabo area. 

Nearby, secondary businesses of food vending, touting and trucking all dragged to a halt. Activities at nearby bus terminals such as Arua, Nebbi and Buganda bus parks where menial labourers cash in by transporting merchandise from whole sellers to truckers, were notably low.    

Shop attendants spent the better part of the day seated on porches of largely empty, but heavily guarded streets. 

Mr Moses Lwegaba, the spokesperson of FUTA, the organiser of the strike, said day one of the non-violent civil disobedience was successful and that traders would stay away until URA halts implementation of EFRIS and their other demands are met. 

These grievances include alleged double-taxation, harassment by tax collectors, unfair completion with foreign factory owners retailing similar products on the cheap and rent hikes by landlords by 18 percent.

Information on URA website shows EFRIS entails using Electronic Fiscal Devices (EFDs), e-invoicing and direct communication with “business transaction systems to manage the issuance of e-receipts and e-invoices in accordance with the Tax Procedures Code Act 2014”.

Put another way, once a transaction is initiated using any of the solution’s components, the transaction details would be automatically transmitted to the tax body in real time, resulting in the generation of electronic receipts and invoices.

“It is painful to us to close business because it comes with heavy losses,” Mr Lwegaba said last evening, “But we had to do it to protect our businesses from collapsing because of unfair taxes and Uganda Revenue Authority (URA)’s Efris system which we don’t understand.” 

By press time yesterday, Kikuubo, a business hub, which the URA’s Commissioner General John Musinguzi once said commands 60-70 percent of the country’s business transactions, remained closed. 

The hub is where traders from upcountry cities and town buy their merchandises, which they in turn retail to last minute buyers, meaning the impact of the strike in Kampala will spread across the country. 

Some experts predict likely increase in prices of groceries due to failure by dealers to replenish stock.  

Officials said the strike disrupted tax collection for both URA and Kampala Capital City Authority (KCCA), and temporarily took jobs out for low income earners such as food vendors and touts who work hand-to-mouth on daily basis to feed families and meet basic costs.

URA Commissioner General John Musinguzi told this newspaper on Sunday that they had engaged Kacita leaders from early last year on how EFRIS works and its benefits, including developing more user friendly versions of the application to onboard traders, and fresh claims by the strike organisers that their members don’t understand the tax invoicing and collection method are a ruse.  

Under EFRIS, URA targets businesses with an annual turnover of at least Shs150m to register so that their sales and applicable tax obligations are monitored by URA in real time through a computer-to-computer system interface. 

Insiders said some of the businesses collected Value Added Tax (VAT) from customers but over the years failed to remit the cash to the tax collector, and many now fear EFRIS will exposure them to pay up. 

URA first started implementing EFRIS among manufacturers, other bigger companies and later in supermarkets with installed sales point systems. 

Its staff then moved to implement it in Kikuubo and the city centre where traders demanded to first be educated, which URA says it did. 

Despite the sensitisation and in-person meetings attended by, among others URA boss Musinguzi and Ministry of Finance Permanent Secretary Ramathan Ggoobi, traders for whom URA built a mobile phone responsive version said EFRIS wasn’t suitable for usage and their businesses. 

They accused URA teams of using excessive force to enforce compliance, including intercepting and seizing goods without EFRIS receipts from porters between shops or bus terminals, which they said scared customers. 

Mr Ibrahim Bbosa, spokesman for the revenue entity, in a media blitz yesterday said most of the traders’ claims --- except unfair competition and rent hikes --- are unjustified because they have had prolonged engagements with them over EFRIS. 

URA, he noted, will continue to collect taxes in amounts and manners prescribed in law.

This newspaper understands that the grievances by the businesses has reached the desk of President Museveni who before the start of the strike yesterday had promised to meet the proprietors this month.  

We were unable to confirm from State House if the meeting remained on the cards following the start yesterday of a civil disobedience that government officials and law enforcement branded as disruptive and unnecessary.  

Ms Margaret Nabwami, a food dealer in Kikuubo, said some of customers contacted her, but she on arrival found the shop locked. 

“The customers didn’t turn up after they heard on the news in the morning that shops had been locked. It is a huge loss to me and my colleagues,” Ms Nabwami said. 

Kikuubo, Nabugabo and Ben Kiwanuka streets that are often full of heavy trucks offloading or loading goods were empty. The truck operators and owners of the merchandise anticipated violent crashes that would damage their property prompting them to keep them away. 

Ms Nabwami said although she hasn’t sold her products, she is in agreement with other traders that ENFRIS enforcement should be halted. 

There was heavy deployment of both the army and the police in the central business district. 

The URA teams were not visible in the city centre yesterday.

Police Spokesman Fred Enanga said some of the traders behind the strike have a political agenda to disrupt the economy of the country. 

Officials of KACITA, a member of FUTA, said they opposed the strike because their members intended to cash in on sales for Idd-ul-Fitr, which Uganda Muslim Supreme Council announced will be celebrated tomorrow. 

KACITA Chairman Thaddeus Nagenda said “we agreed to engage the government on the issues up to April 16. If we failed to agree, we would continue to strike on April 18”.  

“We also talked to the landlords. They told us that they closed the arcades for fear of their buildings being burnt during the strike,” he said. 

Some of the landlords support the strike, according to URA, because many have higher rental tax liabilities after EFRIS showed they under-declared rental income. 

Mr John Kabanda, the president of FUTA, yesterday claimed that traders in Masaka, some 130 kilometres away from the capital, had planned to join the strike which he said they plan to spread countrywide. 

“We will continue to rally other traders to close their shops until there is a change in taxes being levied on them by Uganda Revenue Authority,” he said, “While we are not against the system itself, the taxes imposed on us are excessively high, and the way the system is being enforced is unjust.”

Traders strike
List of traders demands

• Stop Electronic Fiscal Reporting and Invoicing System (Efris) implementation until traders have been educated about it.

• Reduce taxes on imported garments.

• Uganda Revenue Authority (URA) teams stop violent enforcement of the use of Efris.

• Armed personnel attached to URA should not operate in the business hubs.

• Reduce rent on shops in the city.

Previous strikes
• September 1996: Traders strike after the introduction of VAT in Uganda.

• December 2005: Kacita went on strike over URA taxes.

• July 2011: Traders closed shops due to a weak Uganda shilling against the dollar and other foreign currencies.

• January 2012: Traders went on strike over high interest rates on loans.

• April 2017: Traders closed shops over increase in the number of Asians in retail businesses.